Express Scripts Hold
ESRX
Delayed Nasdaq - 09/21 10:00:03 pm
94.58USD
-0.48%

Express Scripts : St. Louis braces for loss of another headquarters as Cigna acquires Express Scripts

Envoyer par e-mail
03/09/2018 | 04:32 am

March 09--St. Louisans should be numb to it by now.

It was 10 years ago that Anheuser-Busch, a brand entwined in this city's DNA, was gobbled up by international brewer InBev. German conglomerate Bayer's takeover of agriculture and scientific giant Monsanto is expected to close in months. Panera Bread is now part of a Luxembourg investment firm. Purina is part of Nestlé.

With consolidation rampant in the health care industry, it's not a surprise to those who follow it that Express Scripts appears to be on its way to becoming the pharmacy benefit unit of health insurance giant Cigna.

But locals can be excused if news of the tie-up, a closely guarded secret until hours before the official announcement, came as a shock. The esoteric business of prescription drug management didn't exactly make Express Scripts a national household name. But it was long one of the best-performing corporations here, run from headquarters in north St. Louis County and employing some 4,700 locals.

And it had risen over the last three decades to become the biggest company by revenue in St. Louis, coming in at No. 22 on the Fortune 500 list last year. That's bigger than Bank of America. Bigger than Microsoft. Bigger than its acquirer, Cigna.

Though the Express Scripts pharmacy benefit management unit will remain headquartered here, St. Louis knows all too well that the loss of the C-suite can affect local charitable giving and local jobs, often high-paying administrative ones.

With corporate consolidation comes talk of synergies, code for overlapping functions that often includes information technology, management and accounting. Cigna says it believes it can hit $600 million in annual administrative efficiencies following closure of the $67 billion deal.

"When you have two organizations coming together in any space, there's likely to be some overlap," said John Boylan, an Edward Jones analyst who follows Express Scripts.

That said, he added that Cigna doesn't currently operate a pharmacy benefit manager, so there's less overlap than other mergers. "We see the operation in St. Louis being an important part of the organization longer term."

Still, there are likely functions at both health care companies dealing with prescription benefits, said Jason Turner, a professor of health policy and management at the University of Cincinnati and a former controller at Cigna. Whether affected jobs will be on the Cigna side or the Express Scripts side is hard to say.

Some of the efficiencies could come from more cost-effective delivery of health care benefits, using the vast data of both companies to coordinate prescription drugs and other services, Turner said. Even then, "I suspect that the vast majority of it will be redundancy," he said.

Bloomfield, Conn., where Cigna is based, isn't exactly a hotbed of pharmacy benefit management talent, though. Express Scripts is "already a high-functioning industry leader" and the cost of moving operations is very expensive, Turner said.

"There might be some reorganization, there might be some restructuring, but operations are likely to stay," he said.

Sheila Sweeney, who as head of the St. Louis Economic Development Partnership leads economic development efforts in St. Louis County, pointed to Cigna CEO David Cordani's comments earlier about past purchases.

"After they've acquired other companies, they've actually grown personnel," Sweeney said.

It would probably have a larger employment impact if it was two insurers merging, rather than one insurer adding a pharmacy benefit manager to its suite of services, said Barton Hamilton, a Washington University professor at the Olin Business School who studies health economics.

"It's nice to have a Fortune 50 company headquartered in St. Louis, just for the other things they do and hopefully they'll continue to do those things, but I don't think there's going to be a huge job impact here," Hamilton said.

Those "other things" -- namely, philanthropic giving both by the company and executives -- are likely to be impacted, say those in the nonprofit world. According to tax filings, the Express Scripts Foundation gave about $2 million in both 2016 and 2015, often to local nonprofits and institutions that ranged from the St. Louis College of Pharmacy to the Little Bit Foundation to Beyond Housing. It's impossible to know how much money -- and time and leadership on local boards -- is donated by executives.

"One thing is for sure -- it always changes, it's just a matter of degree," said Eileen Heisman of the National Philanthropic Trust. "It seems to me by observing this that the corporate headquarters and where they're located really makes a big difference in where charitable giving occurs."

And in St. Louis, we're more dependent on corporate charity than other cities, said St. Louis Community Foundation President and CEO Amelia Bond.

"Philanthropy is place-based," she said. "So yes, when we have corporate mergers that occur, they do have an impact on local philanthropy and specifically those nonprofits that have had close ties with the company or its employees."

Big buyouts can have positive effects. The St. Louis Community Foundation, which manages charitable funds for locals, saw a boost of about $50 million a decade ago when many locals who held Anheuser-Busch stock made money in the storied company's sale. But she said endowed funds, rather than annual giving, "can weather these types of storms."

"If Anheuser-Busch had opened a corporate endowed fund pre-merger, that would still be here today," Bond said. "We have individual (endowed funds), but we don't have a corporate one."

___

(c)2018 the St. Louis Post-Dispatch

Visit the St. Louis Post-Dispatch at www.stltoday.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

Acquiremedia 2018
Envoyer par e-mail